Unraveling the Effects of Tier-Copayment Drug Benefit Designs

Drug Benefit Designs More information is needed about the effects of member out-ofpocket copayments on prescription drug utilization and costs. On the one hand, the introduction in the last 2 years of generic versions of several popular drugs reduces dramatically the treatment cost per patient for hypertension, coronary heart disease, community-acquired bacterial infections, depression, gastroesophageal reflux disease (heartburn), and hyperlipidemia. Over-the-counter loratadine (generic Claritin) has added more opportunities for costeffective drug benefits management and caused many pharmacy benefit managers to reconsider the common coverage exclusion for OTC drugs; competition had reduced the OTC price of loratadine to less than $.50 per day of therapy within a few weeks of OTC availability of loratadine, a discount of about 75% compared to prescription drug alternatives cetirizine, desloratadine, and fexofenadine. Generic versions of therapeutic class leaders such as Mevacor, Prilosec, Augmentin, Zestril, Prinivil, Vasotec, and Prozac make it possible to treat up to 5 times as many patients for the former cost of treating one patient with the brand-name drug. A generic-only drug benefit plan is becoming increasingly plausible. Clinicians will differ, but the economics are compelling. Short of a generic-only benefit, health plans and employers can push members to generic drugs with low copayments ($5 or less per month of therapy) and higher brand-drug copayments ($20 or more per month of therapy) in 2-tier copayment drug plan designs. Three-tier, 4-tier, and 5-tier copayment designs create more opportunities to influence member behavior. Member satisfaction must always be a measure to consider in designing any health benefit, particularly prescription drugs, the most commonly used health plan benefit. In this issue of the Journal, Nair, Wolfe, Valuck, McCollum, Ganther, and Lewis conclude that drug utilization changes were modest in the measurement of prescription utilization behavior among health plan members who were converted from a 2-tier copayment plan to a 3-tier copayment drug benefit plan. Other observers may find generic drug utilization changes of 6 to 8 absolute percentage points and a 5.6% absolute increase in formulary adherence, from 81% to 87%, to be more than modest. In fact, most managed care pharmacists would find these changes significant and remarkable. In addition to utilization changes associated with benefit design (copayment) changes, members in the drug plans that “converted” from 2-tier to 3-tier copayment designs had median health plan costs per patient per month (PPPM) that were 60% less than the median health plan costs PPPM for 2-tier plans and 33% less than 3-tier plan members who remained in the 3-tier copay plans. The median copayment for members converted from a 2-tier to a 3-tier plan increased from $3 to $16.83, but this amount was less than the median copayment of $19.81 for 2-tier plan members who remained in 2-tier plans and a median $21.42 copayment for 3-tier plan members who remained in 3-tier copayment drug plans. These collective data appear to suggest that while median copayment changes may be large in relative terms for members converted to a 3-tier copayment plan from a 2-tier copayment plan, these changes produce significant and remarkable changes in drug utilization and significant reductions in net health plan costs. Yet, the extant work by Nair et al. appears to raise as many questions as it provides answers, similar to published work that preceded this article. These outcomes may be associated with the lack of a common definition of the intervention. Multiple-tier copayment drug benefit plans are a heterogeneous lot. Two-tier plans may or may not be administered with prior authorization requirements (for nonformulary or high-cost drugs), and these PA requirements may be rigorous or lax, the latter amounting to not much more than hassle factors for physicians, pharmacists, and members. The formulary content for 2-tier plans may be small in scope or more comprehensive, and without PA or other restrictions on access, the 2-tier formulary would rely upon voluntary behavior change among members, prescribers, and pharmacists. Three-tier copayment plans may be associated with a small number of formulary drugs or broad in scope. Some 3-tier copayment plans employ the third copayment tier for nonformulary drugs while other 3-tier copayment plans have 2 copayment tiers for formulary drugs. As with 2-tier copayment plans, the amount of the copayments and the magnitude of the difference between the copayment tiers may be small ($5 or less per month) or quite large ($20 or more per month of drug therapy). Controlling for all of the important factors that may have some effect on cost and utilization outcomes in prescription drug benefits is a formidable task, particularly as the content of the drug formulary may change as often as each calendar quarter. One particularly thoughtful and comprehensive examination of prescription use among persons aged 65 years or older also raised as many questions as it provided answers. Within the long list of findings was the apparent conclusion that 3-tier copayment drug plans for persons aged 65 years or older were associated with higher member cost-share, but this additional cost was offset by plan cost savings greater than the amount of the increase in the average member cost. This finding suggests that financial incentives caused persons aged 65 years or older to use lower-cost brand drugs and more generic drugs, resulting in more value for each drug benefit dollar (with a potential favorable effect on the drug benefit premium). A study published 2 months earlier, in October 2002, found that adding a third copayment of $30 for nonpreferred brand-name drugs to a $10 generic, $20 brand, 2-tier copayment plan reduced overall drug spending by 4% (P<.001), providing additional evidence of the ability of 3-tier copayments to improve value in excess of the simple transfer of costs from health plans to health plan members. Sophisticated pharmacy benefit managers will note that the work by Nair, Wolfe, Valuck, McCollum, Ganther, and Lewis in this issue of the Journal pertains only to members in health plans with specific chronic disease states. These findings may have little relevance to pharmacy benefit managers and actuaries when estimating future costs and premiums, both of which are calculated

for members converted to a 3-tier copayment plan from a 2-tier copayment plan, these changes produce significant and remarkable changes in drug utilization and significant reductions in net health plan costs.
Yet, the extant work by Nair et al. appears to raise as many questions as it provides answers, similar to published work that preceded this article. These outcomes may be associated with the lack of a common definition of the intervention. Multiple-tier copayment drug benefit plans are a heterogeneous lot. Two-tier plans may or may not be administered with prior authorization requirements (for nonformulary or high-cost drugs), and these PA requirements may be rigorous or lax, the latter amounting to not much more than hassle factors for physicians, pharmacists, and members. The formulary content for 2-tier plans may be small in scope or more comprehensive, and without PA or other restrictions on access, the 2-tier formulary would rely upon voluntary behavior change among members, prescribers, and pharmacists. Three-tier copayment plans may be associated with a small number of formulary drugs or broad in scope. Some 3-tier copayment plans employ the third copayment tier for nonformulary drugs while other 3-tier copayment plans have 2 copayment tiers for formulary drugs. As with 2-tier copayment plans, the amount of the copayments and the magnitude of the difference between the copayment tiers may be small ($5 or less per month) or quite large ($20 or more per month of drug therapy). Controlling for all of the important factors that may have some effect on cost and utilization outcomes in prescription drug benefits is a formidable task, particularly as the content of the drug formulary may change as often as each calendar quarter.
One particularly thoughtful and comprehensive examination of prescription use among persons aged 65 years or older also raised as many questions as it provided answers. Within the long list of findings was the apparent conclusion that 3-tier copayment drug plans for persons aged 65 years or older were associated with higher member cost-share, but this additional cost was offset by plan cost savings greater than the amount of the increase in the average member cost. 4 This finding suggests that financial incentives caused persons aged 65 years or older to use lower-cost brand drugs and more generic drugs, resulting in more value for each drug benefit dollar (with a potential favorable effect on the drug benefit premium). A study published 2 months earlier, in October 2002, found that adding a third copayment of $30 for nonpreferred brand-name drugs to a $10 generic, $20 brand, 2-tier copayment plan reduced overall drug spending by 4% (P<.001), 5 providing additional evidence of the ability of 3-tier copayments to improve value in excess of the simple transfer of costs from health plans to health plan members.
Sophisticated pharmacy benefit managers will note that the work by Nair, Wolfe, Valuck, McCollum, Ganther, and Lewis in this issue of the Journal pertains only to members in health plans with specific chronic disease states. These findings may have little relevance to pharmacy benefit managers and actuaries when estimating future costs and premiums, both of which are calculated www.amcp.org Vol. 9 primarily on the basis of per-member-per-month and per-employee-per-month measures. Similarly, Nair et al. employed measures of the median, rather than the mean, and per-patient rather than per-member, in their investigation of the effects of benefit design on prescription utilization and costs. Use of these alternate measures was made necessary by the nature of their study design, which used inclusion criteria that made their subjects "patients," chronic users of prescription drugs.
Readers of the article by Nair et al. should also note that the 3 study groups were dissimilar. The authors readily acknowledge this dissimilarity in the study groups. In fact, their Table 1 shows that the only factor that was not dissimilar among the study groups was the proportion of males versus females in each. Medicare+Choice members accounted for 57.2% of the 2-tier copayment plan members who stayed in 2-tier drug plans versus zero members in each of the other 2 study groups. Others have not been as careful or thorough in measuring characteristics of study groups in a longitudinal, preintervention and postintervention design with comparison groups. Nevertheless, the findings of the work by Nair et al. in this issue of the Journal are suggestive and not definitive.

■■ Preventable Drug-related Morbidity (PDRM)
MacKinnon and Hepler in this issue of the Journal examine the incidence of potential examples of preventable drug-related morbidity (PDRM) in a senior, Medicare-risk population of a hospitalbased health system in Florida. 6 This study does not tie these identifiable examples of PDRM to actual clinical outcomes. Yet, the work is of interest to those dedicated to continuous quality improvement (CQI) in health care, the reduction of threats to patient safety, and maximization of opportunities to increase the frequency of favorable clinical outcomes. The method used to develop these PDRM indicators was described in a previous article in the Journal. 7 Expert panel consensus was reported for several clinical indicators of PDRM that included indicator no. 6, an emergency room (ER) visit or hospitalization due to hyperkalemia subsequent to the use of an ACE (angiotensin converting enzyme) inhibitor, without checking electrolytes and CBC at least every 6 months. By this measure, most of our elderly population on an ACE inhibitor could be at risk of PDRM. 8 The distinction between drug-related morbidity (DRM) and preventable DRM (PDRM) is of obvious importance to managed care pharmacists since PDRM would, by definition, be reducible.
More than 50% of the patients with identifiable PDRM risk factors in the study by MacKinnon and Hepler were in 3 categories (pertaining to postmyocardial infarction (MI) treatment and diabetes management) that have been addressed specifically by managed care organizations in clinical practice improvement interventions and CQI programs. In fact, significant strides have been made in the past few years to improve the quality of care for patients after MI and in the periodic and scheduled measurement of hemoglobin A1c in diabetic patients. The National Committee for Quality Assurance (NCQA) 2002 report of health care quality measures from 2001 for 271 MCOs representing 71 million members, or about 28% of the U.S. population, found improvement in several key measures. Beta-blocker use increased in 2001 to 93.5% of eligible post-MI patients compared to 89.4% in 2000, 85.0% in 1999, and 62.5% in 1996. 9 Hemoglobin A1c testing increased to 81.4% of diabetic enrollees in 2001 compared to 78.4% in 2000 and 75.0% in 1999, and hemoglobin A1c testing among Medicare enrollees was 85.3% in 2000 for NCQA-accredited MCOs versus 78.9% among nonaccredited MCOs. While managed health care systems have made significant and measurable strides in quality improvement in care processes that pertain to at least 3 of the top 5 potential PDRMs suggested by MacKinnon and Hepler, this is a moving target. While there is still opportunity to improve quality, significant improvement has been made. Examination of data from 149,177 Medicare hospital admissions for MI in 1994 and 1995 showed that the top-ranked cardiology hospitals in U.S. News & World Report' s "America' s Best Hospitals" had lower adjusted 30-day mortality (odds ratio 0.87) compared to other hospitals. Aspirin and beta-blocker use was higher in the topranked hospitals compared to other hospitals, 96% versus 89%, and 75% versus 62%, respectively. 10

■■ ERT, HRT, Raloxifine, Calcitonin, or Bisphosphonates for Osteoporosis
The sudden termination of the Women' s Health Initiative (WHI) trial of combination conjugated equine estrogen (CEE) and medroxyprogesterone acetate MPA) on May 31, 2002, precipitated a significant media event in the succeeding months. For most physicians, the "news" that estrogen and progestin in combination (hormone replacement therapy-HRT) were associated with a small increase in risk of breast cancer was not surprising, nor was it surprising that fractures were significantly lower among users of combination estrogen and progestin. Any prior use of HRT was found to be associated with a 114 cases of breast cancer over the average 5.2 years of follow-up, a rate of 1.34%, compared to 102 cases (rate of 1.26%) for women who had never taken HRT. 11 This finding combined with the results from the Heart and Estrogen/progestin Replacement Study (HERS) and HERS II suggest that combination estrogen and progestin is associated with (a) a higher risk of breast cancer than estrogen alone, 12 and (b) no protection from the risk of coronary heart disease (CHD) in either primary or secondary prevention. 13,14 WHI found increases in CHD (22%), MI (29%), stroke (41%), and pulmonary embolism (twice the rate in the placebo group). On the positive side, combination HRT was shown to result in 37% fewer cases of colon cancer, 33% fewer hip fractures, and 24% fewer fractures overall.
Physicians in the United Kingdom reacted to the news of termination of the WHI trial by requesting the continuation of clinical HRT trials. 15 British scientists recommended in mid-July 2002 that a major trial of HRT set to involve 22,000 women should continue. The U.K. study, the Women' s International Study of Long-Duration Oestrogen after Menopause (WISDOM), began in 1999 and will be conducted until the end of 2012 to determine if HRT,

Editorial Subjects-In This Issue
specifically estrogen alone or in combination with progestin, is associated with the risk of MI, breast cancer, osteoporosis, or dementia. Britain' s Medical Research Council said the committee in charge of the WISDOM trial believed there were no strong ethical or scientific reasons to stop. WISDOM has already recruited 5,000 British women. Eventually, more than 16,000 postmenopausal women aged 50 to 69 years in the United Kingdom and 6,000 from Australia and New Zealand will be involved in the study.
Most women do not take estrogen replacement therapy (ERT) or combination HRT to lower lipid levels or for protection from adverse cardiac events, despite the earlier evidence that estrogen had favorable effects on cardiovascular disease, about one third attributable to lipid reduction and two thirds of the favorable effect attributable to direct effects such as vasodilatation and inhibition of the response of blood vessels to injury and development of atherosclerosis. 16 Wyeth reported in mid-July 2002 that 92% of the prescriptions for HRT in 2002 were written for postmenopausal symptoms, compared to 76% in 1999. 17 Osteoporosis accounted for 51% of the reasons for using ERT/HRT in 2002, compared to 80% in 1999. Protection from cardiovascular disease accounted for only 16% of the prescriptions in 2002, down from 68% in 1999.
A comprehensive review of the literature published in early 2002 found that ERT/HRT (a) may not be the best choice for osteoporosis, but it is relatively inexpensive with few side effects; (b) is effective in primary prevention of cardiovascular disease (CVD) but may not be effective in secondary prevention (in women with established CVD); and (c) may help retard memory loss in women and might prevent Alzheimer' s disease (AD). 18 This review also suggested a qualitative point about ERT/HRT and the risk of breast cancer: ERT/HRT might increase the risk of breast cancer, but the cancers associated with ERT/HRT appear to be more benign tumors, possibly explaining the observation of lower breast cancer mortality rates among ERT/HRT users compared to nonusers. The 33% fewer hip fractures and 24% fewer fractures overall found in the WHI study are consistent with previous findings from case-controlled and cohort studies in which HRT was associated with about a 30% reduction in risk of hip fracture; 19,20,21 2 placebo-controlled studies in osteoporotic women found a 50% reduction in the risk of fractures of the spine. 22,23 The effectiveness of ERT in the prevention of osteoporosis may be improved by starting at menopause rather than later in postmenopausal life. 24 Revised labeling for CCE and combination CCE+MPA approved by the FDA in January 2003 included indications for (a) relief of moderate to severe vasomotor symptoms associated with menopause (the primary reason women seek treatment), (b) relief of moderate to severe symptoms of vulvovaginal atrophy associated with menopause, and (c) prevention of postmenopausal osteoporosis in appropriately selected patients. 25,26 Bisphosphonates are alternative pharmacotherapy for osteoporosis. A study funded by the maker of alendronate found that 0.625 mg CEE plus 5 mg MPA was approximately 2 times as effective as 5 mg of alendronate in preserving or building bone miner-al density (BMD) in postmenopausal women. 27 There has been controversy surrounding the promotional activities of raloxifene for risk reduction for breast cancer, 28 despite FDA-approved labeling that did not permit this claim but did include study findings that raloxifene is associated with a lower rate of breast cancer, 0.52 cases of invasive breast cancer per 1,000 women-years, one third less than the rate among women taking placebo. 29 In this issue of the Journal, Mullins and Ohsfeldt present a budget impact model that compared raloxifene to alendronate (risedronate was not compared) and CEE+MPA therapy for postmenopausal prevention; calcitonin was not included in the model. 30 The authors used conservative outcomes from clinical trials in the assumptions in their model. For example, the authors assumed no reduction in risk of hip fractures from raloxifene since the available evidence points to reduction in risk of vertebral fractures only. 31 On the other hand, unlike raloxifene, there is convincing clinical evidence that risedronate reduces hip fractures, by 30% over 3 years, regardless of BMD, 40% for women with low BMD, and 60% for elderly women with prevalent vertebral fractures. In their model, Mullins and Ohsfeldt used estimates of 1-year and 3-year risk reduction for hip fracture of -18% and -35% for CEE+MPA, respectively, and -25% and -50% for alendronate, respectively.
There are both safety and efficacy concerns for the bisphosphonates and safety concerns for ERT. Reports of liver damage with alendronate caused some experts to question the safety of the bisphosphonates in general. 32 The labeling for pamidronate (not FDA-approved for osteoporosis) was changed in late 2002 to warn against the use of doses of greater than 90 mg (the recommended dose) due to the possible risk of deterioration of renal function that may lead to renal failure. 33 A study of the use of alendronate under real-world conditions found about one third of users discontinued use of alendronate within the first 3 months of use, and new upper gastrointestinal (GI) symptoms ascribed to use of alendronate were reported by 32.7% of users. 34 The effects of bisphosphonates on the GI tract appear to contribute to symptoms that many users find intolerable or unacceptable, and a study reported in 2002 found an incidence of gastric ulcers in 6% of 300 patients taking 5 mg per day of risedronate and 12.1% of 297 patients taking alendronate 10 mg per day (P=0.013). 35 The efficacy data for the bisphosphonates in the prevention and treatment of osteoporosis suggest that better pharmacologic therapies are needed. Alendronate users have been found to experience a 1% incidence of hip fractures versus 2% in untreated patients, which the news media reported in relative terms only, as a 50% reduction in the risk of hip fracture. 36 Risedronate at either 3.5 mg per day or 5.0 mg per day was associated with an incidence of hip fracture of 2.8% versus 3.9% among patients who received placebo (P=0.02), an absolute difference of 1.1% and relative risk reduction of 28%. 37 For the osteoporosis group only, the incidence of hip fracture was 1.9% versus 3.2% for placebo, an absolute risk reduction of 1.3%, meaning that it would require 231 person-years of risedronate to prevent one hip fracture or about $160,000 of risedronate at discounted pharmacy prices in CY 2000. Also notable was that only 50% of the women completed the full 3 years of treatment with risedronate.
In addition to the bisphosphonates, risedronate and alendronate, calcitonin, ERT/HRT, and parathyroid hormone (PTH), the pharmacologic armamentarium for treatment of osteoporosis includes teriparatide, a PTH segment approved by the FDA on November 26, 2002. Teriparatide, injected daily into the thigh or abdomen, is approved for the treatment of osteoporosis in postmenopausal women who are at high risk for a fracture and to increase bone mass in men with primary or hypogonadal osteoporosis who are at high risk for a fracture. 38 The definition of high risk would include men or women with a history of osteoporosisrelated fracture, or who have multiple risk factors for fracture, or who have failed or are intolerant to previous osteoporosis therapy, based upon physician assessment. The inconvenient administration, high cost (about $7,300 per year), black-box label warning of osteosarcoma observed in rat studies, 39 and approval for use only in high-risk osteoporotic persons would tend to suppress widespread use of the drug. However, teriparatide is unique among the agents used to treat osteoporosis by increasing the number and action of the bone-forming osteoblasts. The FDA "Talk Paper" released with the notice of approval of teriparatide noted that this "is the first approved agent for the treatment of osteoporosis that stimulates new bone formation." Data from 24 clinical trials enrolling more than 2,800 men and postmenopausal women with osteoporosis showed that the drug stimulated new bone formation, lowered the risk of vertebral (spinal) fractures and BMD in postmenopausal women with osteoporosis during an average of 19 months of treatment. 40 Relative risk of spinal fractures was reduced by 65% (9.3% absolute risk reduction), and the relative risk of nonspinal (wrist, ribs, hips, ankle-foot, etc.) by 53% (2.9% absolute risk reduction). BMD increased in 96% of women, compared to baseline; 72% experienced a BMD increase of at least 5% and 44% had a BMD increase of 10% or more.
Osteoporosis disease management should become a primary focus for all managed care organizations for several reasons, not the least of which is the looming cost of preventing fractures with drugs. Hip fracture, the most serious and even life-threatening outcome, has become the accepted measure of the cost of osteoporosis. Hip fracture is a valid measure of the societal cost of osteoporosis because hip fractures (a) are strongly related to low BMD, 41 (b) cost more to repair than other fractures, and (c) cause more disability than any other type of osteoporotic fracture. 42 Hip fracture is a relatively reliable measure of osteoporosis because hip fractures are usually treated in hospitals and therefore more amenable to accurate counting, domestically and internationally. The estimated lifetime risk of hip fracture for white women aged 50 years or older is 17% in the United States compared to only 6% for white men 43 ; the risk of vertebral fractures is greater than 30%. 44 The 17% (one-in-six) lifetime risk of hip fracture for white women aged 50 years or older is greater than the one-in-nine lifetime risk of developing breast cancer. Hip fracture is a serious and even life-threatening outcome of osteoporosis, and the prevalence of hip fractures is increasing because the world' s population is aging and because the frequency of hip fractures is increasing by 1% to 3% per year in most areas of the world. 45 More than 300,000 hospital admissions per year are attributable to osteoporotic hip fractures among estrogen-deficient women. 46 Effective osteoporosis disease management includes member education about the importance of diet, particularly adequate calcium and vitamin D intake; weight-bearing exercise; avoidance of risk factors that include cigarette smoking; alcohol and drugs that might contribute to hypotension or impaired motor skills; and even physical protection from the effect of falls. 47 Desai, Duncan, and Sloan in this issue of the Journal found that only 68% of women with a fracture and a diagnosis of osteoporosis received drug therapy to prevent osteoporosis-related fracture. 48 This percentage is optimistic since the inclusion criteria for their study included at least one pharmacy claim per calendar quarter, thereby selecting a patient population that was not random in the health plan. Their patient identification criteria may have missed some patients with diagnoses of osteoporosis or osteoporosis-related fracture since they captured only the primary or secondary diagnosis on medical claims. Data used to develop the proposed Health Plan Employer Data and Information Set measure for 2004 showed that there was a range of 30% to 41% of women who were on drug treatment for the prevention of fracture at the time of fracture, and two thirds of the prior treatment was HRT. 49 Nevertheless, the study by Desai, Duncan, and Sloan underscores another opportunity for managed care to improve population health. Left to others is determination of the cost-effectiveness of prescription drug therapy to reduce the effects of osteoporosis, an analysis that should include all available alternate therapies for prevention of osteoporosis and real-world estimates of drug cost. The relative cost-effectiveness of alendronate would be increased significantly by the market availability of generic alendronate, a development of great interest to managed care pharmacy and one made contemporary by the decision of the High Court of Justice for England and Wales that found in January 2003 that 2 patents protecting alendronate sodium were invalid. 50